Pod Insights Finshots Daily The Meesho IPO explained About this episode In today’s episode on 3rd December 2025, we break down the Meesho IPO, the company that quietly became India’s largest e-commerce platform by order volume, long before most people realised what was happening — as it opens for subscription today and runs till 10 December.
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Transcript 0:00 Speaker 00 Hello folks, you're tuned into Finshots Daily and in today's episode, we break down the Meesho IPO. The company that quietly became India's largest e-commerce platform by order volume, long before most people realised what was happening, as it opens for subscription today and runs till 10 December.
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1:03 Speaker 00 You get same-day deliveries, branded packaging, algorithmic recommendations and a level of convenience that makes waiting even 24 hours feel unreasonable. But step outside the metros and the entire picture changes. In tier-two and tier-three India, incomes are lower and speed matters far less. People are willing to wait a week if it helps save 50 rupees on a t-shirt and they aren't as eager to chase brands as they are to get a bargain. Behind this low-price aesthetic sits Meesho, one of the biggest consumer internet machines India has ever seen. And now, that company wants to go public. While Amazon and Flipkart poured a lot of money into capturing premium customers in big cities, Meesho quietly built a giant by doing the exact opposite.
1:48 Speaker 00 It embraced India's price-sensitive heartland, powered its platform with micro creators and irresistibly low prices, and in the process, ended up shipping nearly 29 to 31% of all e-commerce orders in the country. To understand why this matters, we need to first understand what Meesho actually does. At its core, Meesho is a marketplace that connects millions of small sellers with buyers across the country. But unlike traditional platforms, Meesho doesn't charge more sellers a commission. It built a zero-commission model that dramatically lowered the barrier to entry for manufacturers and homegrown businesses. When you tell a small seller that they can reach millions of customers without paying upfront fees, they show up in droves.
2:31 Speaker 00 That influx of sellers in turn creates the endless variety of low-priced goods that attracts Meesho's user base. And the magic of business lies on how people actually shop on the platform. Unlike Amazon, where most people search for specific products, Meesho is driven by discovery. Users browse through feeds, create a videos, trending items and curated collections, stumbling upon things they didn't intend to buy. The purchase journey is closer to scrolling through Instagram than searching through a catalog. This discovery engine is so central to Meesho that a part of this IPO proceeds will be used to strengthen its creator ecosystem, feed algorithms and content-driven shopping experience. But Meesho isn't just the marketplace you see on the app.
3:12 Speaker 00 Buried deep inside the IPO prospectus is another segment the company believes could become important in the future: new initiatives. This includes low-cost logistic services, grocery fulfillment network and Meesho Payments, which aims to provide digital financial services to sellers. Today, these initiatives contribute almost nothing to revenue in absolute terms, but the growth rate tells a different story. Segment revenue went from 79.2 lakh rupees in FY23 to 1.4 crore rupees in FY24 and then to 4 crore rupees in FY25. For a company operating at Meesho's scale, even small improvements in logistics costs or the successful rollout of daily-use categories like grocery could have an outsized impact in the future.
3:55 Speaker 00 Similarly, a payments and credit ecosystem for millions of small, unorganized sellers could create high-margin revenue streams that the core marketplace cannot generate on its own. Still, the present reality is anchored in marketplace business. And Nisho's revenue model is a complex bundle of service fees sellers pay to operate on the platform. Forward and return shipping fees make up a sizable portion of the income. Nisho mall sellers pay mall fees that combine commissions with additional shipping-related charges. Advertising has become a meaningful revenue line too, especially as creators increasingly drive product discovery and sellers pay to promote visibility. The platform also earns from value-added services such as assurance programs
4:37 Speaker 00 that protects sellers from unpredictable return costs, pilot phase fees rooted through logistics partners, and even a share of interest income when NBFC partners lend money to sellers. Because the RHP, that's the IPO document, does not break these pieces out separately, all of this sits inside the broad marketplace revenue figure. But you can see the top-line story. Revenue from operations climbed from 5,734 crore in FY23 to 7,615 crore in FY24 and then to 9,389 crore in FY25. Now, that is a good growth in absolute terms. The bottom line, however, tells a different story.
5:19 Speaker 00 The company recorded a loss of 1,0564 crore in FY23, followed by a smaller loss of 324 crore in FY24, only to swing dramatically to a staggering loss of 3,945 crore in FY25. The financials also raise questions about earnings quality. Other income at 511 crore in FY25 plays a non-trivial role in supporting total income. And other expenses, which is a broad category that includes fulfillment, logistics, advertising and seller enablement cost, and seller enablement cost is massive at 9,120 crore.
6:00 Speaker 00 But perhaps the most significant structural challenge in Nisho's business is its relationship with cash on delivery. See, cash on delivery is what part the companies rise in price-sensitive markets, but it also injects a lot of volatility into unit economics. COD orders are successful only seventy-seven percent of the time, whereas prepaid orders succeed ninety-seven percent of the time. Every unsuccessful COD order carries two logistics costs, the forward delivery and the return with no revenue to offset them. On a platform built around low average order values, the cost of these failed deliveries can pile up quickly. At the fact that delivery times are still close to a week, similar to Amazon or Flipkart in the two thousand teens, and the path to consistently profitable unit economics becomes sticky.
6:45 Speaker 00 Competition is another pressure point. Deep-pocketed rivals like Amazon and Flipkart can subside sellers, waive fees and undercut prices for longer than Michu can. The company itself called out the risk of competitors using aggressive pricing strategies that compress Michu's market share or force it to increase fulfillment and marketing spends. This pressure becomes even sharper because Michu relies heavily on advertising and seller service fees for monetization. If ad yields fall or sellers reduce promotional spending, revenue growth could slow and margins could compress even further. All of this brings us to the heart of the matter. Michu is a rare business that has built extraordinary scale in markets that were once considered unprofitable or too fragmented.
7:28 Speaker 00 Its audience, seller relationships, content-led demand funnel and logistics pipes are valuable assets. But scale is not the same as profitability. The filing presents a company that is growing rapidly but also burning cash aggressively and carrying significant operational challenges. The company wants five thousand four hundred and twenty-one crore rupees worth of IPO funds, four thousand two hundred and fifty crore rupees of which is a fresh issue and will be used to invest in technology, expand logistics, hire AI talent and deepen its marketplace capabilities. These are sensible areas to strengthen. The rest, a smaller portion of the IPO, is an offer for sale. The valuation seems reasonable if you look at the upper price band of a hundred and eleven rupees
8:12 Speaker 00 relative to its book value per share, which works out to be about ninety. Miso's peers on the other hand trade at a P to B ratio of about seventeen times and since Miso has made losses all these years, its EPS is negative, that's earnings per share, which means you can't compare it to its peers using the PE ratio. Yet, the bigger question remains whether Miso can fundamentally improve its unit economics in a model where returns, long delivery cycles and COD create persistent cost pressure. For long-term investors, the primary question isn't whether Miso can keep growing but if it will ever translate this growth into healthy margins and sustainable cash flows without repeated injections of capital.
8:55 Speaker 00 All right, folks, I will see you tomorrow. Until then, have a wonderful Wednesday. Thank you for listening to today's episode and if you want to share your feedback or suggestions, do drop us an email to [email protected] . Until next time.
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